

https://www.scoop.co.nz/stories/BU2003/S00236/xe-data-update-rbnz-cut-ocr-by-075-to-025.htm

XE Data Update - RBNZ Cut OCR By 0.75% To 0.25%

Monday, 16 March 2020, 9:06 am
Press Release: XE Money Transfer

The RBNZ cut the Official Cash Rate (OCR) by 0.75% to 0.25%.

This was an emergency rate cut in response to the growing negative economic implications of the COVID-19 virus.

The key points in the RBNZ statement are:

Negative implications to the NZ economy from global COVID-129 outbreak is, and will continue to be, significant
NZ’s financial system remains sound and major financial institutions are well capitalised and liquid
Ensuring banking system continues to function normally
Committee agreed unanimously to keep OCT at 0.25% for at least 12 months
Committee agreed if further stimulus is required, large scale asset purchase programme of NZ Govt bonds preferable to further OCR reductions
There will be no OCR review on the scheduled25th March meeting.
NZ Govt operating an expansionary fiscal policy, has imminent intentions to increase support with fiscal package to provide economic stimulus
Members met for extraordinary session on 15th March in response to the deteriorating economic situation from COVID-19
Demand for NZ’s goods & services will be constrained, as will domestic production due to the outbreak
Staff advised that OCR of 0.25% currently lower limit, given operational readiness of financial system for very low/negative interest rates
Spending and investment will be subdued for an extended period while responses to the virus evolve
Large scale asset purchases of NZ govt bonds next best tool available; committee agreed additional tools mot needed at this points

The NZD is lower in immediate response.

The next OCR decision will be held on the 13th May 2020.

Below is link to the RBNZ press release:

NZD-USD 0.5970 / 0.6010